US Demands Outsourcing and Fixed-Term Contracts Restrictions; KSPI Remains Cautious

Jakarta – The Indonesian Confederation of Workers’ Unions (KSPI) has expressed scepticism regarding a United States request that Indonesia restrict outsourcing and limit fixed-term employment contracts to a maximum of one year.

The provision is outlined in the Reciprocal Trade Agreement between Indonesia and the United States.

“We must examine what is implicit in this clause. If the intention is to weaken competition or the competitiveness of Indonesian products, we must be cautious about this provision,” said KSPI President Said Iqbal in an interview on Saturday (28 February 2026).

KSPI remains open to accepting the proposal if it genuinely provides protection for workers.

“If it is genuinely intended to help Indonesian workers so they can be protected under Indonesian labour law through this ‘pressure’ from the United States, we strongly agree,” said Said.

Said emphasised that outsourcing restrictions must be implemented regardless of the trade agreement.

The Constitutional Court, through Decision Number 168 of 2024, has already mandated such restrictions. The provision will be incorporated into a new Labour Law.

“Outsourcing restrictions are mandatory even without a reciprocal trade agreement,” said Said.

According to the Constitutional Court’s decision, Fixed-Term Employment Agreements or contracts are limited to a maximum of five years.

KSPI and the Workers’ Party plan to conduct a simple survey via questionnaire to determine workers’ positions on the proposal to limit contracts to a maximum of one year.

“Do workers agree that contracts should last at most one year after which they are terminated or converted to permanent employment? This is not clear from the US request,” said Said.

The document also requests that Fixed-Term Employment Agreements be limited to a maximum of one year, after which employees must be converted to permanent staff or terminated.

The current Job Creation Law allows Fixed-Term Employment Agreements to be extended up to five years.

“Only permit contract work for non-permanent duties and a maximum of one year,” the document states.